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Archive for January, 2010

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Can I do a 1031 exchange with money from the sale of a long-term lease?

I have a long-term lease on a large commercial building. I’d like to sell this lease and re-invest the money in the purchase of an investment property. Do I qualify for a 1031 exchange in this case?

Yes, the sale of a lease is “like kind property” for other real estate.

However, in order to qualify for 1031 treatment, your lease must itself have been held for investment or the production of income. In this case, that means that you could not have have been using the leased premises for your business activities.

Finally, you will have to comply with the other requirements for 1031 treatment.

Please re-post with additional facts to clarify this point.

Hope this helps.

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